Genetic studies have demonstrated that heparan sulfate proteoglycans (HSPGs) are essential for reception of growth factors on the cell surface, formation of morphogen gradients, and axon guidance. HSPGs function in many different biological contexts, yet very little is known about the molecular basis for their activities. We are using the genetic tools available in Drosophila to investigate several outstanding questions in proteoglycan biology, including mechanisms regulating HSPG function and new developmental roles for HSPGs. One important yet unsolved question is how the specificity of HSPG functions for different ligand proteins is generated. HS chains have markedly heterogeneous structures produced by the regulated introduction of N-, 2-O-, 6-O-, and 3-O-sulfate groups. Evidence suggests that these fine structures of HS control discrete signaling events at the cell surface. The molecular mechanisms for this control, however, are largely unknown. One of our goals is to understand how specific HS fine structures are generated and function in vivo during development. Another goal of our research is to identify and explore novel roles of HSPGs in development. We previously found that HSPGs regulate the gradient formation of morphogens in the developmental field. We now propose a new model that HSPGs are also involved in the formation of the stem cell niche, another developmental process where cells receive positional cues in a strictly controlled fashion. Our preliminary study strongly suggests that HSPGs are required for the establishment of the germline stem cell (GSC) niche in the developing ovary through a different mode of action from their activity in the developing wing. We propose to elucidate the molecular mechanisms by which HSPGs regulate the formation of the Drosophila GSC niche. Our study also aims to identify novel HS-dependent signaling. Our preliminary data indicate that Drosophila HSPGs participate in the Janus kinase/signal transducers and activators of transcription (JAK/STAT) pathway in the ovary. The involvement of HSPGs in this pathway has never been demonstrated in any model system to date, although Unpaired, a known ligand of the Drosophila JAK/STAT pathway, is a heparin binding protein. We will investigate the roles of HSPGs in this pathway using Drosophila oogenesis as our model. Our specific aims of the proposed research are: Aim 1. Explore the molecular functions of HS modifying enzymes in signaling during Drosophila development. Aim 2. Explore roles of HSPGs in Drosophila germline stem cell niche. Aim 3. Establish roles of HSPGs in the JAK/STAT pathway.